UK construction sees marginal decline in activity for March 2019

25th April 2019

UK Construction Sector remains mildly positive into the medium-term.

Barbour ABI data on all contract activity revealed that the value of all construction contract awards in March 2019 was £5.3bn based on a three-month rolling average. This is a 1.2% decrease on February but is 0.6% higher than for March 2018.
Quarterly analysis indicates that in the three-month period ending March 2019, total contract awards value was £16.1bn. Comparisons with the previous quarter show 9.0% increase and this is also 3.9% higher than the three-month period ending March 2018. The number of contract awards decreased by 15.0% in March and follows 6.7% decrease in contract awards numbers in February.

What regions in the UK see the most construction activity?

London was the largest region for contract awards in March with 19.3% share of contract awards. London was followed by the North West with share of 12.5% and the South East with 12.2% share of contract awards in March.

The largest contract award in March was in the North West region and was the £120 million distribution unit at Symmetry Park in Morton Park Way, Darlington which will provide 141,880 sq m of distribution space as well as associated access works. The second largest contract award was in London which was valued at £100 million and was the residential portion of the 8-10 Broadway Development which see 246 units built as part of a mixed redevelopment of New Scotland Yard. Also valued at £100 million the Swansea Central Phase 1 project will see the construction of a new 3,500 seat arena with additional facilities including offices, conference centre and residential units.

What types of construction projects are taking place throughout the UK?

The residential sector maintained its dominant position in terms of contract awards in March with 31.6% share and was followed by commercial & retail with 16.1% share and hotel, leisure & sport with 13.6%. The largest residential contract award in March was the £100 million project Ten Broadway development at New Scotland Yard in London which will see Multiplex Construction Europe Limited deliver a total of 246 luxury apartments in a 20-storey building. The largest commercial & retail contract award was the £73.1 million project at Manchester Goods Yard which will see Lendlease Limited provide a total of 29,248 sq m of office space in an 11-storey structure. The largest hotel, leisure & sport contract award was the £100 million Swansea Central Phase 1 development which will see Buckingham Group Contracting Limited build a new 3,500 seat arena for Swansea City and County Council.

Read further to find out how the different sectors within construction are performing in the UK.

What activity did we see in UK residential construction in March?

In March 2019, the value of residential contract awards was £1.8 billion based on a three-month rolling average. This is an increase of 8.3% on February but is 25.1% lower than March 2018. In the three-month period ending March 2019, total residential contract awards were valued at £4.9 billion which is a decline of 2.5% on the previous quarter and also 23.5% lower than the comparable quarter ending March 2018.

Residential unit numbers increased to 10,066 in March based on a three-month rolling average which is 2.1% higher than February but is 30.6% lower than March 2018. March has proved to be a positive month in terms of contracts values and residential unit numbers, however the overall new housing sector is facing continued pressures on affordability issues as well as slowing consumer confidence which is likely to dampen demand for new housing into the short-term.

What activity did we see in UK infrastructure construction in March?

The infrastructure sector was less positive in March with contract awards falling by 39.3% on February to £849 million. However, this is 31.5% higher than March 2018. For the three-month period ending March 2019, total construction contract awards were £3.8 billion, which is an increase of 15.2% on the previous quarter and also 18.2% higher than the comparable quarter ending March 2018.

Volatility returned to the infrastructure sector in March as contract awards dipped below the £1 billion threshold for the first time since November 2018. However, value for March is still 43% higher than the recent low point of £595 million in May 2018. The outlook for infrastructure is positive with completions of key phases for larger-scale projects likely to continue to underpin output into the medium-term.

What activity did we see in UK commercial & retail construction in March?

The value of commercial & retail contracts awards increased by 8.3% in March to £853 million which compares to £788 million in February. This is also a 24.3% increase on March 2018. For the three-month period ending March 2019, total commercial & retail contract awards were £2.6 billion, which is 39.6% ahead of the previous quarter and is also a 45.7% increase on the comparable quarter ending March 2018.

Q1 2019 has been more positive than the preceding quarter with underlying growth in contract awards for the off ices sub-sector. The retail environment however remains problematic with many organisations continuing to post profit warnings and report reduced foot fall.

What activity did we see in hotel, leisure & sport construction in March?

In March the value of contract awards in the hotel, leisure & sport sector was £628 million based on a three-month rolling average. This is a 30.6% increase on February and also 73.5% ahead of March 2018. Evidence of the continued upward trend is also apparent through quarterly analysis which shows total value of contract awards for the quarter ending March 2019 at £1.5 billion. This is an increase of 69.0% on the previous three-month period and also 55.9% higher than the comparable quarter ending March 2018.
2019 has started particularly well for this sector with March data underpinned by new hotel developments. However, construction output into the medium-term will continue to be influenced by levels of consumer spending on non-essentials.

What activity did we see in industrial construction in March?

The value of industrial contract awards in March 2019 was £562 million based on a three-month rolling average. This is an increase of 8.9% on February but is 1.1% lower than March 2018. In the quarter ending March 2019, the total value of industrial contract awards was £1.6 billion which is 12.6% higher than the previous quarter and also 7.5% ahead of the comparable three-month period ending March 2018.

The continued upward trend for contract awards in March continues to underpin prospects for steady underlying output growth into the short-medium term, with logistics and distribution facilities likely to provide the main impetus for output growth.

What activity did we see in medical & health construction in March?

The volatility of medical & health contract awards continued in March with contract awards value reaching £176 million, based on a three-month rolling average. This is 43.9% higher than February but is 12.3% lower than March 2018. For the three months ending March 2019 the total value of medical & health contract awards was £432 million, which is at the same level as the previous quarter but is 8.9% lower than the corresponding three-month period ending March 2018.
Whilst the latest data has seen significant growth compared with February, value still remains below the £200 million threshold which was last breached in May 2018. The outlook for the sector remains subdued with significantly fewer contract awards on a monthly basis compared to other sectors.

What activity did we see in education construction in March?

In March, contract awards in the education sector were valued at £467 million based on a three-month rolling average. This is an increase of 8.0% on February and also 5.8% higher than March 2018.
Quarterly data shows that in the three-month period ending March 2019, the total value of education contract awards was £1.3bn. This is an increase of 8.8% on the previous quarter and is also a 7.5% increase on the comparable quarter ending March 2018.